Ford is shelving the intention to build a new assembling plant in northern Mexico. Instead in his new pact he announced to the United Auto Workers his intention to create a new small car in the USA.

UAW President Ron Gettelfinger in the recent contract negotiations proclaimed that his first and main goal is to make GM and Ford builds small, fuel efficient vehicles in plants where union members work. According to Gettelfinger’s speech to the Detroit Economic Club, small car production is in danger of leaving the U.S. and this can happen in the next few years.

According to a new agreement Ford agreed to keep open five plants including assembly plants in Louisville, Ky., and Wayne, Mich. The company is going to retool the Wayne plant which now is producing the Ford Focus. Also the company promised to extend for another year, until 2009, the existence of the assembly plant in St. Paul, Minn., which builds Ford Ranger pickups.

The terms of the new UAW contract will help Ford improve its competitiveness and make it more profitable. The contract terms concerning the healthcare at Ford’s plants will also increase the company’s profit almost $2 billion annually.

In 2006 announcing his Plan of Development “Way Forward” Ford mentioned about the intention to build a new, low-cost assembly line. According to the plan it had to be founded in northern Mexico but the UAW lobbied against it.

However the planning of Mexican plant was so well and thoroughly worked out that even now it is not considered to be shelved. At least Ford seems not to give up his intention.